USD/JPY: Expectations of the Interest Rate Increase in the USA Have Significantly Decreased
USD/JPY: Expectations of the Interest Rate Increase in the USA Have Significantly Decreased
At the closing trading session in Asia Japanese stock index Nikkei Stock Average fell by 3.6% to 16164.16 points. At the same time Japanese Yen has grown against the USD and major currencies due to the disappointing data on Tankan indices for Q1 released by the Bank of Japan.
Decline of sentiments in the business circles of Japan resulted in the decline in price of shares in the Japanese stock market and redistribution of investments to Japanese currency as a safe-haven currency. The pair USD/JPY fell by 35 points by the beginning of European session and pressure on the pair continues.
At the end of January the Bank of Japan introduced negative interest rate of -01% on deposits of the commercial banks, exceeding bank reserve requirement.
At the press-conference in March the head of the bank Mr. Kuroda said that the bank was not planning to terminate the policy of negative interest rates, as it is an efficient way to reach the target inflation rate of 2% in the near future.
Investors worry that the efforts of the prime minister of Japan Shinzo Abe to stimulate economic growth will not work fine in the time of uncertainty and slowdown of the global economy. In her last speech in the middle of this week, the head of the US Fed, Janet Yellen also mentioned about increasing risks amid economic and financial uncertainty.
Al these facts will cause risk aversion as investors will prefer gold and the Yen. The pair USD/JPY will remain under pressure.
Today, market participant will focus their attention on the US news, which will be released from 14:30 to 16:00 (GMT+2). The news will include: ISM index of purchasing managers (PMI) in the manufacturing sector and Non-Farm PayRolls for March.
Even in case of positive data the rise in the USD will be short-term.
Medium-term rise in the USD and the rise of expectations of the interest rate increase is not expected as the head of the US fed Janet Yellen was very cautious speaking about possibility of further monetary tightening policy in the USA.
The material has been provided by LiteForex - Finance Services Company - www.liteforex.com
